Running a nonprofit takes passion, dedication, and a big heart. Whether you’re working to save endangered animals, slow climate change, or help your neighborhood prosper, it’s easy to let your mission take center stage. After all, tirelessly serving that mission is key to your nonprofit’s success.
But are you looking at your nonprofit like a business?
While the mission-focused work of your organization is essential, that on-the-ground progress simply won’t happen unless you’re in a business mindset. Money, paperwork, procedures -- it all adds up to help your daily work have a greater impact on the causes you care so much about.
As you put plans in place to launch your nonprofit, keep these three essential business components in mind:
When you start a nonprofit, you have to start separating your automatic association between “making money” and “profit.” You’re not in this business for the millions, but cash flow can make or break your meaningful work in the nonprofit sector.
Along with good money management, responsible funding at a nonprofit leaves room for reinvestment. If you’re planning to receive grants or other funding specific to particular projects, you may not be able to plan for “extra” money in the bank. But it’s wise to think of ways to put money back into your nonprofit, just like you would think about how to invest revenue back into a flower shop or consulting firm.
That reinvestment might come in the form of launching a new program, boosting a social media campaign, or budgeting to give a dedicated employee a raise. By keeping costs in check, your nonprofit can manage its funding to go the furthest possible distance.
Nonprofit executives can get a bad rap for taking large salaries. But try not to think about the extreme cases of poor fiscal responsibility. Think about the people who work with you, and the tasks you rely on them to perform. Who takes care of your annual reports, IRS form 990 filings, and audits? Who oversees marketing so that your organization gets the word out about your efforts?
A team of entry-level staffers may be eager to work, but in many cases it’s worth the higher price tag for a seasoned professional. When you review job descriptions, make sure that your team is making salaries comparable to their colleagues in the private sector. Providing healthy compensation for those professionals who are essential to your nonprofit mission builds the strength of the entire organization, while keeping your staff excited to come to work each day.
Don’t leave yourself out of the salary equation, either. As much as you might wish and hope, passion alone can’t pay the bills.
You may not be expecting huge returns like a for-profit business, but your nonprofit will need a plan for growth. A complete business plan for a nonprofit should cover your cash flow -- including how you intend to raise money to support your work -- along with realistic salaries and anticipated rent or lease costs. Don’t forget administrative expenses, and the little things like copy paper that add up quickly.
When it’s time to apply for grants or reach out for other forms of funding, that business plan can help you make a solid case for your nonprofit.
But no good business, whether for profit or a worthy cause, was magically built overnight. Many SCORE mentors across the country have worked in nonprofits, as executives or as founders -- and sometimes both.
Your local office can match you with a mentor that can help with your specific needs, or you can browse email mentors who are versed in the nonprofit world.
So go ahead, kick your feet up onto your desk and start thinking of the big picture for your nonprofit. How can you apply for-profit business lessons to your work for the greater good?